Full opinion text
SUBSTITUTE MAJORITY OPINION CHARLES W. SEYMORE, Justice. We overrule appellees’ motions for rehearing. We withdraw our opinion dated June 2, 2005 and issue this substitute majority opinion. This case involves an insurance coverage dispute over whether the insured home-builders are covered under six commercial general liability (“CGL”) policies for damages resulting from their application of defective stucco material to numerous homes. Appellants, Lennar Corporation, Lennar Homes of Texas Land and Construction, Limited, and Lennar Homes of Texas Sales and Marketing, Limited, d/b/a Village Builders (collectively “Lennar”) are the insureds. Appellees, Great American Insurance Company and American Dynasty Surplus Lines Insurance Company (collectively “American Dynasty”), Gerling America Insurance Company (“Gerling”), Markel American Insurance Company (“Markel”), RLI Insurance Company (“RLI”), Insurance Company of the State of Pennsylvania (“ICSOP”), and Westches-ter Fire Insurance Company (“Westches-ter”), are the insurance carriers (collectively “the carriers”). Lennar appeals the denial of its motion for summary judgment and the grant of each carrier’s motion for summary judgment on the coverage issues. Lennar also appeals the grant of American Dynasty’s separate motion for summary judgment on Lennar’s extra-contractual claims. We affirm the denial of Lennar’s motion for summary judgment as to all carriers. We affirm the summary judgments in favor of Gerling, RLI, ICSOP, and West-chester. We reverse and remand the summary judgment on coverage issues in favor of Great American/American Dynasty. We reverse and remand the summary judgment in favor of Markel. We affirm the summary judgment in favor of Great American/American Dynasty on Lennar’s extra-contractual claims. I. Background From early 1996 through late 1999, Len-nar built more than 400 homes in the Houston area with a synthetic stucco called Exterior Insulation and Finish System (“EIFS”). According to Lennar, the manufacturers of EIFS marketed it as an ideal product for wood-framed homes. However, Lennar contends it later discovered that EIFS is defectively designed such that it traps water behind it and does not allow the water to drain. Consequently, the trapped water can cause damage, such as wood rot, mold, and termite infestation, among other problems, to other parts of the home. Through the spring of 1999, Lennar had received a few complaints from homeowners about EIFS-related problems. In the spring of 1999, the complaints increased after television programs regarding EIFS aired. According to Lennar, it initially accepted the manufacturer’s position that the problems were caused by installation error and/or were typical of wood-framed homes. Therefore, Lennar addressed these complaints on an individual basis. However, by September 1999, after spending the summer responding to complaints, Lennar became convinced EIFS is a defective product. Thereafter, Lennar removed the EIFS from all the homes and replaced it with a traditional stucco. According to Lennar, it also repaired resulting water damage to the homes although the extent to which any homes sustained damage is disputed. Lennar then sought indemnification for all its replacement and repair costs from the carriers. The carriers refused to indemnify Lennar for the EIFS claims contending there is no coverage under their policies. Lennar sued the carriers requesting a declaratory judgment that they have a duty to indemnify Lennar for the EIFS claims and alleging breach of contract and violations of former article 21.55 of the Texas Insurance Code based on the carriers’ refusal to indemnify. In addition, Lennar asserted extra-contractual claims against American Dynasty only. Lennar and each carrier filed a motion for summary judgment on the coverage issues. The trial court denied Lennar’s motion and granted all the carriers’ motions. American Dynasty also filed a motion for summary judgment on Lennar’s extra-contractual claims, and the trial court granted the motion. II. The Issues and Our Review In its first issue, Lennar contends the trial court erred by denying Lennar’s motion for summary judgment because Len-nar established coverage under all the policies. Alternatively, in its second issue, Lennar contends the trial court erred by granting the carriers’ motions for summary judgment because there was, at least, a genuine issue of material fact on whether coverage exists under all the policies. In its third issue, Lennar contends the trial court erred by granting American Dynasty’s motion for summary judgment on Lennar’s extra-contractual claims. In its fourth issue, Lennar contends Texas law applies to this dispute. Well-settled principles govern review of summary judgments in insurance coverage disputes. See State Farm Fire & Cas. Co. v. Vaughan, 968 S.W.2d 931, 933 (Tex.1998) (per curiam). To prevail on a traditional motion for summary judgment, the movant must establish there is no genuine issue of material fact so that the movant is entitled to judgment as a matter of law. Tex.R. Civ. P. 166a(c); Fort Worth Osteopathic Hosp., Inc. v. Reese, 148 S.W.3d 94, 99 (Tex.2004). To prevail on a no-evidence motion for summary judgment, the movant must establish that “after adequate time for discovery, there is no evidence of one or more essential elements of a claim or defense on which an adverse party would have the burden of proof at trial.” Tex.R. Civ. P. 166a®; Reese, 148 S.W.3d at 99. To defeat a no-evidence motion, the non-movant must produce more than a scintilla of evidence raising a genuine issue of material fact. Tex.R. Civ. P. 166a(i); Reese, 148 S.W.3d at 99. When, as here, a trial court’s order granting summary judgment does not specify the grounds relied upon, we must affirm summary judgment if any of the grounds are meritorious. FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868, 872-73 (Tex.2000). Finally, when both parties move for summary judgment and the trial court grants one motion and denies the other, we must review both parties’ summary-judgment evidence, determine all issues presented, and render the judgment that the trial court should have rendered. Id. at 872. Lennar filed one motion for summary judgment as to all the carriers. However, each of the six carriers filed its own motion for summary judgment and response to Lennar’s motion for summary judgment. Therefore, in effect, we have six separate cross-motions for summary judgment to review on the coverage issues. However, the dispute with respect to each cross-motion follows a typical framework for insurance coverage litigation. Interpretation of insurance contracts is governed by the same rules as interpretation of other contracts. Trinity Universal Ins. Co. v. Cowan, 945 S.W.2d 819, 823 (Tex.1997); Forbau v. Aetna Life Ins. Co., 876 S.W.2d 132, 133 (Tex.1994). When construing a contract, the court’s primary concern is to give effect to the written expression of the parties’ intent. Forbau, 876 S.W.2d at 133. We construe an unambiguous insurance policy as a matter of law. Am. Mfrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154, 157 (Tex.2003). Further, the duty to indemnify is triggered by the actual facts establishing the insured’s liability in the underlying suit. Cowan, 945 S.W.2d at 821. Generally, an insured bears the initial burden to prove the claims against it fall within the scope of coverage afforded by the policy’s initial “insuring agreement.” Comsys Info. Tech. Servs., Inc. v. Twin City Fire Ins. Co., 130 S.W.3d 181, 193 (Tex.App.-Houston [14th Dist.] 2003, pet. denied); Evergreen Nat’l Indem. Co. v. Tan It All, Inc., 111 S.W.3d 669, 675 (Tex.App.-Austin 2003, no pet.). Then, the insurer bears the burden to prove an exclusion or other avoidance of coverage. Comsys, 130 S.W.3d at 193; Tan It All, 111 S.W.3d at 675; see Act of May 27, 1991, 72nd Leg., R.S., ch. 242, § 11.03, 1991 Tex. Gen. Laws 939, 1046 (repealed and recodified 2003) (current version at Tex. Ins.Code Ann. § 554.002 (Vernon Supp.2005)). Lennar asserts it is entitled to coverage for the EIFS claims because it was “legally obligated to pay ... damages because of ... ‘property damage’ ... caused by an ‘occurrence’ ” as required by the initial “insuring agreement” of all the policies. However, all the carriers dispute that there was an “occurrence” and “property damage” as defined in the policies. Then, each carrier asserts various exclusions, conditions precedent, or other grounds to defeat coverage under its respective policy. First, we will address the “occurrence” and “property damage” issues because they are common to all carriers. Then, we will review the cross-motions for summary judgment as to each carrier. Finally, we will review American Dynasty’s motion for summary judgment on Lennar’s extra-contractual claims. III. “Occurrence” Under Texas Law “Occurrence” is defined in the policies as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” “Accident” is not defined in the policies. However, the Texas Supreme Court has stated that an injury is accidental if “ ‘from the viewpoint of the insured, [it is] not the natural and probable consequence of the action or occurrence which produced the injury; or in other words, if the injury could not reasonably be anticipated by insured, or would not ordinarily follow from the action or occurrence which caused the injury.’ ” See Mid-Century Ins. Co. v. Lindsey, 997 S.W.2d 153, 155 (Tex.1999) (quoting Republic Nat’l Life Ins. Co. v. Heyward, 536 S.W.2d 549, 557 (Tex.1976)). Two factors bear on the determination of whether an insured’s action constitutes an accident: (1) the insured’s intent, and (2) the reasonably foreseeable effect of its conduct. See id. Within this framework, the Texas Supreme Court has construed “accident” to include the negligent acts of the insured causing damage which is undesigned and unexpected. Cowan, 945 S.W.2d at 828; Massachusetts Bonding & Ins. Co. v. Orkin Exterminating Co., 416 S.W.2d 396, 400 (Tex.1967). In contrast, when the action taken is an intentional tort, there is no accident, regardless of whether the results are unintended or unexpected. Lindsey, 997 S.W.2d at 155; Cowan, 945 S.W.2d at 827-28; Argonaut Southwest Ins. Co. v. Maupin, 500 S.W.2d 633, 635-36 (Tex.1973); see Harken Exploration Co. v. Sphere Drake Ins. PLC, 261 F.3d 466, 472 (5th Cir.2001). In sum, there is an accident when an action is intentionally taken, but negligently performed, and the effect is not the intended or expected result had the action been performed non-negligently. Harken, 261 F.3d at 472-73 (citing Cowan, 945 S.W.2d at 828; Orkin, 416 S.W.2d at 400). Here, Lennar contends its defective construction constitutes an “occurrence” because the uncontroverted evidence shows the resulting “property damage” was unintended and unexpected. In response, the carriers primarily contend that under Texas law, defective construction cannot constitute an “occurrence” as a matter of law. The carriers point out that any “property damage” was solely to Lennar’s own work — the homes. The carriers reason that damage to an insured’s own work is economic loss sounding in contract only, and a breach of contract is not an “occurrence.” In an interrelated argument, they assert that a CGL policy is not meant to function as a performance bond and indemnify an insured for the costs to repair and replace its own work caused by its failure to properly perform its construction contract. The carriers also suggest Len-nar’s defective construction does not constitute an “occurrence” in this case. We find that Texas law is unsettled on whether defective construction can constitute an “occurrence.” We conclude that under the standard CGL policy, negligently created, or inadvertent, defective construction resulting in damage to the insured’s own work which is unintended and unexpected can constitute an “occurrence.” We further conclude that Lennar’s defective construction constitutes an “occurrence” in this case. A. Texas Law Is Unsettled On Whether Defective Construction Resulting In Damage To The Insured’s Work Can Constitute An “Occurrence.” Several Texas appellate courts and federal courts applying Texas law have rendered seemingly conflicting decisions on whether defective construction resulting in damage to the insured’s work can constitute an “occurrence” under a CGL policy. We have not addressed, and the Texas Supreme Court has not resolved, this issue. In fact, based on this conflict, the Texas Supreme Court recently accepted a certified question on this issue from the Fifth Circuit. See Lamar Homes, Inc. v. Mid-Continent Cas. Co., 428 F.3d 193 (5th Cir.2005). 1. The Carriers’ Cases The carriers cite several cases applying Texas law in support of their contention that defective construction cannot constitute an “occurrence” as a matter of law. For example, in Hartrick v. Great American Lloyds Insurance Co., the court held that the insured’s defective construction of a home’s foundation, which resulted in structural problems and damage to the home, did not constitute an “occurrence.” 62 S.W.3d 270, 276-78 (Tex.App.-Houston [1st Dist.] 2001, no pet.). The court reasoned that the insured’s voluntary and intentional conduct was its breach of implied warranties by failing to properly prepare the soil and failing to construct a sufficient foundation, and the damage to the home was the reasonably foreseeable result of this conduct. See id. at 277; see also Malone v. Scottsdale Ins. Co., 147 F.Supp.2d 623, 627-28 (S.D.Tex.2001) (finding insured builder’s alleged failure to construct improvements according to plans and specifications was not an “occurrence” because the conduct was voluntary and intentional); Devoe v. Great Am. Ins., 50 S.W.3d 567, 572 (Tex.App.-Austin 2001, no pet.) (finding insured’s allegedly deficient construction and failure to complete a home on time was not an “occurrence” because the construction was voluntary and intentional even if the resulting, poorly constructed home was unexpected, unforeseen, or unintended). On one hand, Hartrick, Malone, and Devoe seem somewhat limited to their facts because the insureds engaged in substandard construction practices or failed to follow architectural or engineering specifications, from which it could be inferred that they intended or expected the resulting damage. See generally, Hartrick, 62 S.W.3d at 276-78; Malone, 147 F.Supp.2d at 627-28; Devoe, 50 S.W.3d at 569-72. On the other hand, at least Hartrick and Devoe seem to suggest that defective construction cannot constitute an “occurrence” in general because the construction is voluntary and intentional and the resulting damage is reasonably expected even if the insured did not intend or expect the damage. See Hartrick, 62 S.W.3d at 277-78; Devoe, 50 S.W.3d at 571-72. However, the carriers also cite Jim Johnson Homes, Inc. v. Mid-Continent Casualty Co., in which the court did seem to make a blanket holding that defective construction resulting in damage to the insured’s work cannot constitute an “occurrence” as a matter of law. 244 F.Supp.2d 706, 714-19 (N.D.Tex.2003). In Jim Johnson Homes, the underlying claimants complained of numerous deficiencies by the insured during construction of their home which resulted in the insured’s abandoning the project and the claimants’ terminating the contract; the claimants alleged breach of contract, DTPA violations, fraud, and negligence. Id. at 710-12. The court held that the insurer had no duty to defend or indemnify the insured because there was no “occurrence.” Id. at 714-19. The court reasoned that despite the negligence allegations, the gist of the claimants’ complaint was breach of contract based on the insured’s failure to properly perform the contract. See id. The court stated that the purpose of a liability policy is to protect the insured from liability for “property damage” caused by the insured’s product, but not for replacement or repair of the insured’s product. See id. at 714-15. The court further stated that a liability policy is not meant to function as a performance bond and ensure that the insured will perform its construction contract in a workmanlike manner and in accordance with the terms of the contract. See id. at 715. Recently, another federal court expanded on the Jim Johnson Homes court’s theory that an insured’s defective construction resulting in damage to its work cannot constitute an “occurrence” because the claim sounds in contract only. See Lamar Homes, Inc. v. Mid-Continent Cas. Co., 335 F.Supp.2d 754, 758-60 (W.D.Tex.2004), question certified by Lamar Homes, Inc. v. Mid-Continent Cas. Co., 428 F.3d 193 (5th Cir.2005) (citing Jim Johnson Homes, 244 F.Supp.2d at 714). The court noted that the Texas Supreme Court has adopted the “economic loss” doctrine: although the acts of a party may breach duties simultaneously in tort and contract, the nature of the injury determines which duty is breached; when the only injury is economic loss to the subject of the contract, a cause of action sounds in contract alone. Id. at 758-59 (citing Jim Walter Homes, Inc. v. Reed, 711 S.W.2d 617, 618 (Tex.1986)). The court opined that based on the economic loss doctrine, the Texas Supreme Court would hold that a breach of contract is not an “occurrence.” See id. at 759-60 (citing Jim Walter Homes, 711 S.W.2d at 618); see also Gibson & Assoc., Inc. v. Home Ins. Co., 966 F.Supp. 468, 474 (N.D.Tex.1997) (same). 2. Lennar’s Cases In contrast, several courts applying Texas law have concluded that defective construction resulting in damage to the insured’s own work can constitute an “occurrence” if the resulting damage is unintended and unexpected. For example, Lennar cites Great Am. Insurance Co. v. Calli Homes, Inc., in which the court found that the insured’s improper construction of the claimants’ home, including the improper installation of EIFS, that caused various damages to the home alleged an “occurrence.” 236 F.Supp.2d 693, 695-702 (S.D.Tex.2002). The court held that claims arising from negligently created, or inadvertent, construction defects allege an “occurrence” leaving coverage to be determined by the construction-specific exclusions in the policy. Id. at 699-700. The court stated that the consequences of negligently created, or inadvertent, construction defects are accidental, reasoning that although the work was voluntarily and intentionally performed, it was undertaken with the intent to perform properly. Id. More recently, a Texas appellate court held that an insured builder’s negligence resulting in damage to its work can constitute an “occurrence.” See Gehan Homes, Ltd. v. Employers Mut. Cas. Co., 146 S.W.3d 833, 843 (Tex.App.-Dallas 2004, pet. filed). The court specifically disagreed with Jim Johnson Homes and stated that the relevant inquiry is not whether the insured damaged its own work, i.e. the subject of the contract, but whether the damage was unintended and unexpected. Id.; see CU Lloyd’s of Texas v. Main Street Homes, 79 S.W.3d 687, 690-95 (Tex.App.-Austin 2002, no pet.) (finding homeowner’s claim against builder for foundation defects caused by reliance on inaccurate soil survey alleged an “occurrence”); see also First Tex. Homes Inc. v. Mid-Continent Cas. Co., No. 3-00-CV-1048-BD, 2001 WL 238112, at *3 (N.D.Tex. Mar.7, 2001) (not designated for publication), aff'd, No. 01-10467, 2002 WL 334705 (5th Cir.2002) (rejecting argument that damage to insured’s work cannot eonsti-tute an “occurrence” because paramount consideration is whether damage was unintended and unexpected). For the reasons explained below, we agree that the relevant inquiry is not whether the insured damaged its own work, i.e., whether the claim sounds in contract only, but whether the damage is unintended and unexpected. B. Defective Construction Resulting In Damage To The Insured’s Work Can Constitute An “Occurrence.” The principle that a CGL policy does not generally cover the insured’s defective construction resulting in damage to its own work is commonly known as the “business risk” doctrine. See O’Shaughnessy v. Smuckler Corp., 543 N.W.2d 99, 102-03 (Minn.App.1996), abrogated on other grounds by Gordon v. Microsoft Corp., 645 N.W.2d 393 (Minn.2002); Grinnell Mut. Reinsurance Co. v. Lynne, 686 N.W.2d 118, 123-25 (N.D.2004); see also James Duffy O’Connor, What Every Construction Lawyer Should Know About CGL Coverage For Defective Construction, 21-WTR Constr. Law 15 (2001). A passage from a New Jersey case has been cited by many courts to explain the “business risk” doctrine: The risk intended to be insured [by the CGL policy] is the possibility that the goods, products or work of the insured, once relinquished or completed, will cause bodily injury or damage to property other than to the product or completed work itself, and for which the insured may be found liable. The insured, as a source of goods or services, may be liable as a matter of contract law to make good on products or work which is defective or otherwise unsuitable because it is lacking in some capacity. This may even extend to an obligation to completely replace or rebuild the deficient product or work. This liability, however, is not what the coverages in question are designed to protect against. The coverage is for tort liability for physical damages to others and not for contractual liability of the insured for economic loss because the product or completed work is not that for which the damaged person bargained. Weedo v. Stone-E-Brick, Inc., 81 N.J. 233, 405 A.2d 788, 791 (N.J.1979). Therefore, this doctrine recognizes that the consequences of poor workmanship are generally a “business risk” to be borne by the insured as opposed to an insurable risk. Id. at 791-92; see O’Shaughnessy, 543 N.W.2d at 102-03; Lynne, 686 N.W.2d at 123-25; Jotham D. Pierce, Jr., Allocating Risk Through Insurance And Surety Bonds, 425 PLI/Real 193, 197-98 (1998). Here, the carriers generally rely on the “business risk” doctrine to argue that defective construction cannot constitute an “occurrence.” However, we conclude that defective construction can constitute an “occurrence” under the standard CGL policy because (1) coverage for “business risks” is ordinarily eliminated through exclusions — not through the “occurrence” requirement in the initial “insuring agreement”; and (2) coverage for some “business risks” is not eliminated when the damaged work, or the work out of which the damage arose, was performed by subcontractors. 1. The “Insuring Agreement” and the “Business Risk” Exclusions First, coverage for “business risks” is ordinarily eliminated through exclusions— not through the “occurrence” requirement in the initial “insuring agreement.” The initial “insuring agreement” is a broad statement of coverage. See Am. Family Mut. Ins. Co. v. Am. Girl, Inc., 268 Wis.2d 16, 673 N.W.2d 65, 74 (2004). The “insuring agreement” contains no language categorically eliminating coverage for damage to the insured’s own work, i.e. a claim sounding in contract. See id. at 77 n. 6. There is no tort/contract demarcation in the “insuring agreement,” and “occurrence” is not defined by reference to the legal category of the claim. Id. at 77. Instead, “occurrence” is defined as an “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” The Texas Supreme Court has not held that a claim sounding in contract cannot constitute an accident under the initial “insuring agreement.” The court has applied the economic loss doctrine to determine what damages a claimant is entitled to recover. See Jim Walter Homes, 711 S.W.2d at 617-18 (holding claimants not entitled to exemplary damages for defendant’s failure to properly construct their home because claim sounded in contract only); see also Southwestern Bell Tel. Co. v. DeLanney, 809 S.W.2d 493, 494-95 (Tex.1991) (holding claimant could not recover in tort when only damage resulting from defendant’s breach of contract was to the subject of the contract). However, the court has not applied the economic loss doctrine to determine whether an insured’s action constitutes an accident under a CGL policy; Jim Walters Homes and DeLanney did not involve insurance coverage. See Jim Walter Homes, 711 S.W.2d at 617-18; DeLanney, 809 S.W.2d at 494-95; see also Am. Girl, 673 N.W.2d at 75 (clarifying “economic loss” doctrine is a remedies principle which determines whether a loss can be recovered in tort or in contract; it does not determine coverage under an insurance policy which depends instead upon the policy language). Rather, the court has instructed that we examine the insured’s intent and the reasonably foreseeable effect of its conduct. See Lindsey, 997 S.W.2d at 155. Within this framework, “accident” includes an insured’s negligent acts causing damage which is undesigned and unexpected. Cowan, 945 S.W.2d at 828; Orkin, 416 S.W.2d at 400. However, the court has not equated negligent acts as constituting an “accident” with negligence as a form of legal liability. See Cowan, 945 S.W.2d at 826-28; Orkin, 416 S.W.2d at 400; see also Harken, 261 F.3d at 472-73. Instead, the court has held that negligent acts constitute an accident to distinguish negligent acts from intentional torts. See Cowan, 945 S.W.2d at 826-28; see also Harken, 261 F.3d at 472-73. In fact, in Jim Walters Homes, the court recognized that one may negligently, as opposed to intentionally, breach a contract although the claimant is ultimately restricted to breach of contract remedies. See 711 S.W.2d at 618. Further, we consider whether the damage was unintended and unexpected — not whose work was damaged. Lindsey, 997 S.W.2d at 155; Cowan, 945 S.W.2d at 828; Orkin, 416 S.W.2d at 400; see Harken, 261 F.3d at 472-73. Accordingly, the “accident” framework established by the Texas Supreme Court does not necessarily eliminate coverage for damage to the insured’s own work, i.e. a claim sounding in contract. However, the standard CGL policy contains certain “business risk” exclusions. See Am. Girl, 673 N.W.2d at 74; Lynne, 686 N.W.2d at 123. Notably, the “your work” exclusion precludes coverage for “property damage” to “ ‘your work’ arising out of it or any part of it and included in the ‘products completed operations hazard.’ ” In short, the “your work” exclusion precludes coverage for “property damage” to the insured’s work arising after a construction project is finished and in the owner’s possession. The policy also contains exclusions precluding coverage for “property damage” to the insured’s work occurring during construction. In the cases cited here by the carriers, the courts did not consider the effect of the “business risk” exclusions on the “occurrence” analysis. See, e.g., Lamar Homes, 335 F.Supp.2d at 758-60; Jim Johnson Homes, 244 F.Supp.2d at 714-19. Rather, Lamar Homes and Jim Johnson Homes cited T.C. Bateson Construction Co. v. Lumbermens Mutual Casualty Co., in which we recited the “business risk” doctrine and stated that liability insurance is not meant to protect the insured for replacement or repair of its own work. See Lamar Homes, 335 F.Supp.2d at 759 (citing T.C. Bateson Constr. Co. v. Lumbermens Mut. Cas. Co., 784 S.W.2d 692, 694-95 (Tex.App.-Houston [14th Dist.] 1989, writ denied)); Jim Johnson Homes, 244 F.Supp.2d at 714-15 (same). However, we based that doctrine solely on the “business risk” exclusions, including an exclusion for damage to the insured’s work in effect at that time; we did not address the “occurrence” requirement. See T.C. Bateson, 784 S.W.2d at 694-95. Further, in T.C. Bateson, we, in turn, cited Weedo when explaining the “business risk” doctrine. See id. at 695 (citing Weedo, 405 A.2d at 791). However, the Weedo court also did not consider the “occurrence” requirement, but, instead, based its oft-cited “business risk” passage on the exclusions, including an exclusion for damage to the insured’s work. See 405 A.2d at 791-93. Consequently, we disagree with the Lamar Homes and Jim Johnson Homes courts’ reliance on the “business risk” doctrine as recited in T.C. Bateson to conclude that defective construction cannot constitute an “occurrence.” See Am. Girl, 673 N.W.2d at 76-77 (recognizing courts have continually misapplied Weedo to hold that defective construction cannot constitute an occurrence resulting in some “regrettably overbroad” generalizations about CGL policies). Instead, we must read all parts of an insurance policy together to ascertain the parties’ intent and give effect to all parts, so that none will be rendered superfluous or meaningless. See King v. Dallas Fire Ins. Co., 85 S.W.3d 185, 192-93 (Tex.2002); Forbau, 876 S.W.2d at 133; Betco Scaffolds Co. v. Houston United Cas. Ins. Co., 29 S.W.3d 341, 344 (Tex.App.-Houston [14th Dist.] 2000, no pet.). In King, the Texas Supreme Court expressly considered an exclusion when interpreting the initial “occurrence” requirement of a CGL policy and rejected the insurer’s interpretation of “occurrence” that would render the exclusion superfluous and meaningless. 85 S.W.3d at 189, 192-93; see also Cowan, 945 S.W.2d at 828. Similarly, finding no “occurrence” when the insured’s defective construction damages its own work would render the “business risk” exclusions, particularly the “your work” exclusion, superfluous and meaningless. If ... losses actionable in contract are never CGL “occurrences” for purposes of the initial coverage grant, then the business risk exclusions are entirely unnecessary. The business risk exclusions eliminate coverage for liability for property damage to the insured’s own work or product — liability that is typically actionable between the parties pursuant to the terms of their contract, not in tort. If the insuring agreement never confers coverage for this type of liability as an original definitional matter, then there is no need to specifically exclude it. Why would the insurance industry exclude damage to the insured’s own work or product if the damage could never be considered to have arisen from a covered “occurrence” in the first place? Am. Girl, 673 N.W.2d at 78. Quite simply, coverage for “business risks” should be eliminated through the appropriately named “business risk” exclusions which, when applicable, directly address damage to the insured’s own work resulting from a breach of contract. See Am. Girl, 673 N.W.2d at 76-78; Erie Ins. Exch. v. Colony Dev. Corp., 136 Ohio App.3d 406, 736 N.E.2d 941, 947-48 (1999); see also Lynne, 686 N.W.2d at 123-25. Therefore, CGL policies do not generally cover contract claims arising out of the insured’s defective work, but this is by operation of the “business risk” exclusions, not because a loss actionable only in contract can never be an “occurrence” under the initial “insuring agreement.” Am. Girl, 673 N.W.2d at 76; see Colony Dev. Corp., 736 N.E.2d at 947-48. Accordingly, we agree with the cases cited by Lennar because the courts recognized that the “occurrence” requirement can encompass damage to the insured’s own work, and coverage then depends upon the exclusions. See, e.g., Calli Homes, 236 F.Supp.2d at 699-700 (concluding negligently created or inadvertent, as opposed to intentional, construction defects are accidental leaving coverage to be determined by the construction-specific exclusions); Gehan Homes, 146 S.W.3d at 843 (stating that finding no “occurrence” when the damage is to the insured’s own work — the subject of the contract — would read language into the policy “that simply is not there” and render surplusage the exclusions that apply to “property damage”). 2. The Subcontractor Exception More significantly, coverage for some “business risks” is not eliminated when the damaged work, or the work out of which the damage arose, was performed by subcontractors. See Am. Girl, 673 N.W.2d at 82-84; O’Shaughnessy, 543 N.W.2d at 103-05; Colony Devel. Corp., 736 N.E.2d at 948-49. Specifically, the standard “your work” exclusion now contains a subcontractor exception which provides that the exclusion “does not apply if the damaged work or the work out of which the damage arises was performed on [your] behalf by a subcontractor.” It is important to understand the evolution of the subcontractor exception. In the past, the “business risk” exclusions operated collectively to preclude coverage for any damage to construction projects, including damage to the work of subcontractors, or damage arising out of the work of subcontractors. See Am. Girl, 673 N.W.2d at 82; O’Shaughnessy, 543 N.W.2d at 103; Clifford J. Shapiro, Further Reflections-Inadvertent Construction Defects Are An “Occurrence” Under Commercial General Liability Policies, 686 PLI/Lit 73, 82 (2003). Many contractors were unhappy with this situation because more projects were being completed using subcontractors. See Am. Girl, 673 N.W.2d at 82. In 1976, the insurance industry began to offer, for an additional premium, an endorsement to the CGL policy known as the Broad Form Property Damage Endorsement (“BFPD”). See id.; Shapiro, 686 PLI/Lit at 82. The BFPD deleted several portions from the “business risk” exclusions and replaced them with more specific exclusions that effectively broadened coverage. See Am. Girl, 673 N.W.2d at 83; Shapiro, 686 PLI/Lit at 82-84. Among other changes, the BFPD narrowed the “your work” exclusion and extended coverage for “property damage” to the work of a subcontractor or “property damage” arising out of the work of a subcontractor. See Mid-United Contractors, Inc. v. Providence Lloyds Ins. Co., 754 S.W.2d 824, 827 (Tex.App.-Fort Worth 1988, writ denied); Am. Girl, 673 N.W.2d at 82-83; Shapiro, 686 PLI/Lit at 84. In 1986, the insurance industry incorporated this aspect of the BFPD directly into the CGL policy by inserting the subcontractor exception in the “your work” exclusion. See Am. Girl, 673 N.W.2d at 83; O’Shaughnessy, 543 N.W.2d at 103-04; Shapiro, 686 PLI/Lit at 85; O’Connor, 21-WTR Constr. Law. at 16 n. 5. In T.C. Bateson and Weedo, the courts recited the “business risk” doctrine based on a “your work” exclusion in the earlier version of the CGL policy, which did not contain a subcontractor exception. See T.C. Bateson, 784 S.W.2d at 694-95; Weedo, 405 A.2d at 791. Therefore, the “business risk” doctrine as recited in T.C. Bateson and Weedo has been modified by the subcontractor exception and cannot be relied on to defeat coverage for all defective construction. See O’Shaughnessy, 543 N.W.2d at 103-04 (recognizing cases inten-preting pre-1986 CGL policy no longer apply); Shapiro, 686 PLI/Lit at 87 (stating most courts have failed to consider the history of CGL exclusions when determining whether construction defects constitute an “occurrence”). Instead, the subcontractor exception demonstrates insurers intended to cover some defective construction resulting in damage to the insured’s work. See O’Shaughnessy, 543 N.W.2d at 104 (stating “it would be willful and perverse ... to simply ignore” the subcontractor exception that is “an affirmative statement on the part of those who drafted the policy” and “was intended to narrow the ‘business risk’ doctrine”); O’Connor, 21-WTR ConstR. Law. at 15-16 (stating “business risk” doctrine should not bar some defective construction coverage that was intended by drafters of the policy and deemed important enough for insureds to pay millions in premiums). Accordingly, finding no occurrence for defective construction resulting in damage to the insured’s work would render the subcontractor exception superfluous and meaningless. See, e.g., Am. Girl, 673 N.W.2d at 78 (recognizing subcontractor’s work can give rise to “property damage” caused by an “occurrence”); Lee Builders, Inc. v. Farm Bureau Mut. Ins. Co., 33 Kan.App.2d 504, 104 P.3d 997, 1001-03 (2005) (finding that defective materials or workmanship which caused unintended water damage to insured’s project was an “occurrence” under broad “insuring agreement” and that construing “occurrence” more narrowly would render subcontractor exception meaningless); see also Shapiro, 686 PLI/Lit at 85 (stating subcontractor exception demonstrates “property damage” to a construction project arising from subcontractor’s work is an “occurrence”). Finally, we reject the carriers’ argument that allowing defective construction to constitute an “occurrence” will transform a CGL policy into a performance bond. As we will discuss, the “insuring agreement” covers “damages because of ... ‘property damage’ ... caused by an ‘occurrence.’ ” Therefore, although defective construction may constitute an “occurrence,” the insurer indemnifies the insured only for resulting “property damage” arising after the project is completed. In contrast, a performance bond is broader than a CGL policy in that it guarantees “the completion of a construction contract upon the default of the general contractor.” Black’s Law Dictionary 1158 (7th ed.1999); see Florida Bd. of Regents v. Fid. & Deposit Co. of Maryland, 416 So.2d 30, 32 (Fla.Dist.Ct.App.1982), rejected on other grounds by Fed. Ins. Co. v. Southwest Florida, Ret. Ctr., Inc., 707 So.2d 1119 (Fla.1998) (stating purpose of performance bond is to ensure completion of the work upon contractor’s default and insure against any losses the owner may suffer if default occurs). Therefore, a “variety of deficiencies that do not constitute ‘property damage’ may be covered by a performance bond, and not all deficiencies cause additional property damage.” O’Shaughnessy, 543 N.W.2d at 105. Consequently, allowing coverage for some “property damage” resulting from defective construction does not transform a CGL policy into a performance bond and require a CGL carrier to pay anytime an insured fails to complete, or otherwise comply with, its contract. However, to the extent our holding does give a CGL policy some aspects of a performance bond, we are, nonetheless, bound by the language of the current policy. The carriers’ “performance bond” rationale is a rehash of the “business risk” doctrine, which is enforced through the exclusions, when applicable. See Colony Devel. Corp., 736 N.E.2d at 947 (recognizing general proposition that liability policy is not a performance bond, but rationale is not that negligent construction falls outside broad insuring agreement, but that damages are usually excluded by the standard exclusions). Therefore, the “performance bond” rationale has been modified by the subcontractor exception. As one court explained: [T]he [insurance] industry chose to add the [subcontractor] exception to the [“your work”] exclusion in 1986.... We realize that under our holding a general contractor who contracts out all the work to subcontractors ... can ensure complete coverage for faulty workmanship. However, it is not our holding that creates this result: it is the addition of the new language to the policy. We have not made the policy closer to a performance bond for general contractors, the insurance industry has. Kalchthaler v. Keller Constr. Co., 224 Wis.2d 387, 591 N.W.2d 169, 174 (Ct.App.1999). Consequently, we reject the carriers’ attempt to circumvent the subcontractor exception by urging that a “performance bond” rationale negates an occurrence in the first place. See Lee Builders, 104 P.3d at 1003 (rejecting insurer’s “performance bond” argument to negate an “occurrence” because “performance bond” rationale was based on “your work” exclusion that predated subcontractor exception). In sum, reading the standard CGL policy as a whole, we hold that negligently created, or inadvertent, defective construction resulting in damage to the insured’s own work that is unintended and unexpected can constitute an “occurrence.” Nonetheless, the “your work” or other “business risk” exclusions may preclude coverage for the damage. However, in some instances, coverage will be restored if the damaged work, or the work out of which the damage arose, was performed by subcontractors. C. Lennar’s Defective Construction Constitutes an “Occurrence.” Although the carriers primarily contend that defective construction cannot constitute an “occurrence” as a matter of law, they also suggest that Lennar’s defective construction is not an “occurrence” in this case. They assert there is no accident because Lennar voluntarily and intentionally constructed the homes with EIFS even if the resulting damage was unintended and unexpected. The carriers cite Har-trick and Devoe in which the courts found there was no occurrence because the insured’s construction was voluntary and intentional even if the resulting damage was unintended and unexpected. See Hartrick, 62 S.W.3d at 277-78 (citing Lindsey, 997 S.W.2d at 155); Devoe, 50 S.W.3d at 571-72 (citing Maupin, 500 S.W.2d at 633). The Texas Supreme Court has stated that an injury caused by voluntary and intentional conduct is not an accident just because “the result or injury may have been unexpected, unforeseen, and unintended”; however, the court has made this statement with respect to intentional torts. See Lindsey, 997 S.W.2d at 155 (quoting Maupin, 500 S.W.2d at 635); see also Harken, 261 F.3d at 472. The court has explicitly rejected the suggestion that “if an actor intended to engage in the conduct that gave rise to the injury, there can be no ‘accident.’” See Lindsey, 997 S.W.2d at 155; Cowan, 945 S.W.2d at 828; see also Harken, 261 F.3d at 472. Adopting such an approach “would render insurance coverage illusory for many of the things for which insureds commonly purchase insurance.” See Cowan, 945 S.W.2d at 828 (providing example that there is an accident when a hunter shoots at what he believes is a deer but is actually a person; although firing the gun was intentional, the harm can be characterized as accidental). Instead, there is an “occurrence” if an action is intentionally taken, but negligently performed, and the effect is not the intended or expected result had the action been performed non-negligently. Harken, 261 F.3d at 472-73 (citing Cowan, 945 S.W.2d at 828; Orkin, 416 S.W.2d at 400). Here, the uncontroverted evidence demonstrates Lennar did not intend to build the homes with a defective product and did not intend or expect the resulting damage. Daris Horn, Lennar’s Customer Care Specialist who handled the EIFS claims, averred by affidavit that when Len-nar decided to use EIFS in the early 1990’s, the EIFS manufacturers marketed it as an improved form of stucco that was easy to install, “low maintenance,” and ideal for residential, wood-framed homes. Horn further averred that Lennar was unaware EIFS was defective while Lennar was constructing the EIFS homes; instead, Lennar first recognized EIFS was defective in September 1999, approximately the same time it stopped using EIFS. Consequently, Lennar’s construction of the homes with a defective product was inadvertent or, at most, negligent because it was unaware of the defect. Further, the damage was not the intended or expected resulted had the homes been properly constructed, i.e. without a defective product. Accordingly, Lennar’s defective construction constitutes an “occurrence” under Texas law. IV. “OCCURRENCE” UNDER FLORIDA LAW American Dynasty argues that Florida law applies to the “occurrence” issue under its policy. The party asserting application of foreign law bears the burden to first show a true conflict of laws and then demonstrate which law should apply. Weatherly v. Deloitte & Touche, 905 S.W.2d 642, 650 (Tex.App.-Houston [14th Dist.] 1995, writ dism’d w.o.j.), leave granted, mand. denied, 951 S.W.2d 394 (Tex.1997). American Dynasty asserts there is a conflict between Florida and Texas law because Florida law is well-settled that defective construction cannot constitute an “occurrence.” We disagree. To the extent the issue may have been settled when American Dynasty filed its brief, it has since become unsettled. American Dynasty cites LaMarche v. Shelby Mutual Insurance Co., in which the Florida Supreme Court stated that a CGL policy does not cover a insured contractor’s costs to replace or repair defective workmanship and materials. 390 So.2d 325, 326-27 (Fla.1980). However, the court did not consider whether the defective workmanship was an “occurrence”; instead, the court based its holding on Wee-do and the “business risk” exclusions in the pre-1986 policy, including an exclusion for damage to the insured’s work that did not contain a subcontractor exception. See id. at 326-27. Nonetheless, several intermediate Florida appellate courts have cited LaMarche when holding that defective construction is not an “occurrence” under the current CGL policy even if the work was performed by subcontractors; these courts have reasoned that an exception to an exclusion cannot create coverage where none exists in the first place. See, e.g., Lassiter Constr. Co. v. Am. States Ins. Co., 699 So.2d 768, 770 (Fla.Dist.Ct.App.1997); Home Owners Warranty Corp. v. Hanover Ins. Co., 683 So.2d 527, 529-30 (Fla.Dist.Ct.App.1996). However, recently, another intermediate Florida appellate court held that a builder’s CGL policy did cover defective construction performed by a subcontractor. See J.S.U.B., Inc. v. United States Fire Ins. Co., 906 So.2d 303, 307-11 (Fla.Dist.Ct.App.2005). The court distinguished LaMarche, in part, because LaMarche focused on exclusions in the pre-1986 policy, including the“your work” exclusion that did not contain the subcontractor exception. See id. at 807-10. The J.S.U.B. court held that defective construction causing unintended and unexpected damage is an “accident” and mentioned that the “your work” exclusion and its subcontractor exception, would have no meaning if defective construction was not covered under the initial “insuring agreement.” See id. at 308-11. Consequently, the same conflict exists among Florida courts as in Texas. Therefore, American Dynasty has not shown that Florida law differs from Texas law on the “occurrence” issue, and we need not engage in a choice of law analysis. Because Lennar contends in its fourth issue that Texas law applies to coverage issues under the American Dynasty policy, we sustain Lennar’s fourth issue. Accordingly, because Texas law applies to the “occurrence” issue under all the policies, including the American Dynasty policy, Lennar has established an “occurrence” under all the policies. V. “Property Damage” Although we have held that Lennar’s defective construction constitutes an “occurrence,” Lennar must also establish that it paid “damages because of ... property damage” caused by the defective construction. “Property damage” is defined in the policies as “[p]hysical injury to tangible property, including all resulting loss of use of that property.” Lennar contends all its costs are “damages because of ... property damage.” We disagree. We distinguish between three distinct categories of damages: (A) the costs to repair water damage to the homes, which constitute “damages because of ... property damage”; (B) the costs to remove and replace EIFS as a preventative measure, which do not constitute “damages because of ... property damage”; and (C) overhead costs, inspection costs, personnel costs, and attorneys’ fees, which do not constitute “damages because of ... property damage.” A. Costs To Repair Water Damage According to the summary judgment evidence, the EIFS’s entrapment of moisture caused water damage to at least some of the homes. Depending on the home, the water damage included wood rot, damage to substrate, sheathing, framing, insulation, sheetrock, wallpaper, paint, carpet, carpet padding, wooden trim, and baseboards, mold damage, and termite infestation. These damages constitute “physical injury to tangible property.” See Am. Girl, 673 N.W.2d at 74-75 (finding insured’s faulty site preparation caused “property damage” because foundation sank causing the rest of the building to buckle and crack). Consequently, Len-nar’s costs to repair this water damage constitute “damages because of ... property damage.” Nonetheless, the carriers claim that Lennar has not satisfied the “property damage” requirement because it did not prove all the homes sustained water damage. Lennar’s own evidence is somewhat conflicting on whether all homes sustained water damage. In any event, we hold that Lennar’s costs to repair the homes that did sustain water damage constitute “damages because of ... property damage.” B. Removal And Replacement Of EIFS Lennar also contends it is entitled to indemnification for its costs to remove and replace EIFS on all the homes. In contrast, the carriers contend that these costs are not covered because replacement of an initially defective product is not “property damage.” The carriers cite North American Shipbuilding, Inc. v. Southern Marine & Aviation Underwriting, Inc., in which the court held that the insured shipbuilder’s replacement of initially defective welds did not constitute “physical loss ... or damage” as required for coverage under a builder’s risk policy. 930 S.W.2d 829, 832-34 (Tex.App.-Houston [1st Dist.] 1996, no writ). The court stated that the defective welds were never in “an initial satisfactory state that was changed by some external event into an unsatisfactory state,” but instead came into existence in a damaged state. Id. at 833-34. Although North American Shipbuilding involved a builder’s risk policy, we agree with its reasoning at least with respect to its interpretation of “property damage” because it is consistent with the definition of “property damage” in the CGL policies, which requires “physical injury” to tangible property. See Fid. & Deposit Co. of Md. v. Hartford Cas. Ins. Co., 215 F.Supp.2d 1171, 1183 (D.Kan.2002) (stating that under its plain meaning, “physical injury” in CGL policy unambiguously “connotes ... an alteration in appearance, shape, color or in other material dimension”). Here, the EIFS was not physically injured after application to the homes; the EIFS was not changed from a satisfactory state into an unsatisfactory state, or otherwise physically altered. Rather, the EIFS was already in an unsatisfactory state when applied to the homes because it is inherently defective. Therefore, the defective EIFS does not constitute “property damage.” Nonetheless, Lennar suggests that because all the homes sustained water damage, all its costs to fully remove and replace EIFS are “damages because of ... property damage.” We disagree. Even if all the homes experienced water damage, we cannot conclude Lennar’s costs to remove and replace all EIFS on the homes are “damages because of ... property damage.” To the contrary, the evidence reflects that in early 2000, Lennar implemented a plan to remove EIFS and replace it with a traditional stucco on all the homes regardless of whether the EIFS had caused any damage. During the process of replacing the EIFS, Lennar repaired some water damage on at least some of the homes. Nevertheless, the evidence demonstrates Lennar’s intent was to fully remove and replace the EIFS as a preventative measure because it is defective. Fidelity & Deposit Co. involved the dichotomy between damages resulting from physical injury'to property and costs incurred to prevent physical injury to property. See 215 F.Supp.2d at 1174-84. Fidelity issued a performance bond for the insured contractor’s construction of a school. Id. at 1175. Fidelity completed construction of the school after the school district determined the project was defective and terminated the contractor. Id. Fidelity was eventually assigned all the contractor’s rights against its liability insurer, who denied coverage for the damages. Id. at 1175-76. Fidelity argued that based on extensive damage to the project, it had to be demolished and rebuilt; therefore, Fidelity was entitled to indemnification under the contractor’s liability policy for its entire costs to rebuild the project because these costs were attributable to “property damage.” Id. at 1178. The court acknowledged there was physical injury to the project including cracked walls, blocks, joints, floor slabs, and lintels. Id. at 1183. The costs to repair these problems unquestionably constituted covered “property damage.” Id. However, there were other problems which had not resulted in “property damage” but would likely have caused damage in the future. Id. For instance, most of the walls had discontinuous rebar which rendered them susceptible to cracking in the future. Id. The court believed that Fidelity made a good business decision to demolish and rebuild the project due to the potential for extensive damage in the future. Id. at 1180, 1184. However, the court was not persuaded that such a decision would have been necessary to repair only the physically injured property that currently existed. Id. The court held that the proper measure of damages was the amount it would have cost to repair the physically injured property. Id. at 1184. Therefore, Fidelity’s total damages had to be apportioned between its consequential costs to repair physically injured property and its costs to prevent future damage. See id. at 1183-84. Similarly, here, Lennar arguably made a good business decision to remove and replace all the EIFS to prevent further damage. Nonetheless, considering the summary judgment evidence, we cannot conclude that it was necessary for Lennar to remove and replace all the EIFS in order to repair the water damage, if any, to each home. Therefore, the costs incurred by Lennar to remove and replace EIFS as a preventative measure are not “damages because of ... property damage.” Accordingly, Lennar must apportion the EIFS-related damages between its costs to remove and replace EIFS as a preventative measure and its costs to repair water damage to the homes. C. Overhead Costs, Inspection Costs, Personnel Costs, and Attorneys’ Fees Lennar also seeks indemnification for various costs it incurred in addressing the EIFS claims, including overhead costs, inspection costs, personnel costs, and attorneys’ fees. Lennar argues that the carriers must indemnify Lennar for these costs under the “insuring agreement” portion of the policy. Lennar cites Missouri Terrazzo Co. v. Iowa Nat’l Mut. Ins. Co., in which the court held that the insured’s liability policy covered a building owner’s claim for diminution in value caused by damaged floors installed by the insured. 740 F.2d 647, 650 (8th Cir.1984). The court found that the diminution in value constituted “damages because of ... property damage.” See id. Likewise, Lennar characterizes its overhead costs, inspection costs, personnel costs, and attorneys’ fees as “damages because of ... property damage.” We disagree. Lennar ignores the “legally obligated to pay” language in the “insuring agreement.” The “insuring agreement” provides that the carrier will pay those sums that Lennar “becomes legally obligated to pay as damages because of ... property damage.” (emphasis added). The policies do not include a definition of “legally obligated to pay.” However, giving the phrase its ordinary meaning, it means an obligation imposed by law, such as an obligation to pay pursuant to a judgment, settlement, contract, or statute. See Comsys, 130 S.W.3d at 189 n. 3 (recognizing a judgment is not the only manner by which an insured can become legally obligated to pay because a legal obligation can also arise out of a contract, such as a settlement); Tex. Prop. and Cas. Ins. Guar. Ass’n v. Boy Scouts of Am., 947 S.W.2d 682, 691 (Tex.App.-Austin 1997, no writ) (same); see also Pa. Pulp & Paper Co. v. Nationwide Mut. Ins. Co., 100 S.W.3d 566, 574 (Tex.App.-Houston [14th Dist.] 2003, pet. denied) (recognizing courts give terms used in an insurance contract their ordinary and generally accepted meaning unless the policy shows the words were meant in a technical or different sense). While Lennar may have been legally obligated to pay the third-party EIFS claims by replacing EIFS, making repairs, and/or making cash payments, it was not legally obligated to incur its own overhead costs, inspection costs, personnel costs, and attorneys’ fees in connection with settling the claims. Moreover, the Insuring agreement clearly refers to the claimant’s damages that the insured becomes legally obligated to pay. For instance, in Missouri Terrazzo, the diminution in value was the measure of the building owner’s damages resulting from the damaged floors. See 740 F.2d at 650. The insured paid a share of those damages pursuant to settling the claimant’s suit. See id. at 649. In contrast, Lennar’s overhead costs, inspection costs, personnel costs, and attorneys’ fees are not components of the homeowners’ damages. Rather, they are Lennar’s own costs incurred in connection with settling the EIFS claims. Therefore, Lennar was not legally obligated to pay these costs as “damages because of ... property damage.” In sum, Lennar’s costs to remove and replace EIFS as a preventative measure and its overhead costs, inspection costs, personnel costs, and attorneys’ fees are not “damages because of ... property damage.” Consequently, the carriers have no duty to indemnify Lennar for these costs. However, Lennar’s costs to repair water damage to the homes are “damages because of ... property damage.” Accordingly, there remains a genuine issue of material fact on the “property damage” issue because Lennar must apportion its damages between covered damages and non-covered damages. Having resolved the “occurrence” and “property damage” issues common to all the carriers, we will next consider each cross-motion for summary judgment. VI. Gekling Gerling is one of Lennar’s primary carriers. Gerling issued a CGL policy, effective June 1, 1997 to June 1, 1999, with a policy limit of $1 million per “occurrence” and a self-insured retention (“SIR”) of $250,000 per “occurrence.” Lennar moved for summary judgment asserting that the EIFS claims are covered under the Gerling policy because they constitute “property damage” caused by an “occurrence.” We have already concluded that there is no coverage for Lennar’s costs to replace EIFS as a preventative measure. Therefore, because there is no coverage for a portion of Lennar’s costs, the trial court properly denied Lennar’s motion for summary judgment as to Ger-ling. However, we have determined that Lennar’s costs to repair water damage constitute “property damage” caused by an “occurrence.” Therefore, we will consider Gerling’s other summary judgment grounds for defeating coverage. We find one ground dispositive. In particular, Gerling contends that it has no duty to indemnify Lennar because Lennar cannot satisfy the SIR contained in the policy. The policy provides that its coverage limits apply only in excess of the $250,000 SIR. SIR is defined as “the limit of insurance that the insured agrees to assume responsibility for in attempting settlement and/or in payment of all claims resulting from any ‘occurrence.’ ” In short, Lennar must satisfy a $250,000 “deductible” per “occurrence” before coverage is triggered under the Gerling policy. However, we conclude that the EIFS claim for each home constitutes a separate “occurrence,” and Lennar has not incurred damages exceeding $250,000 for any one home. A. Sepakate “Occurrences” Lennar contends that all the EIFS claims constitute one “occurrence.” In contrast, Gerling contends the EIFS claim for each home constitutes a separate “occurrence.” Under Texas law, courts apply a “cause” analysis to determine whether a set of facts involves one or more “occurrences.” Ran-Nan, Inc. v. Gen. Accident Ins. Co. of Am., 252 F.3d 738, 740 (5th Cir.2001) (citing Goose Creek Consol. I.S.D. v. Cont'l Cas. Co., 658 S.W.2d 338, 339 (Tex.App.-Houston [1st Dist.] 1983, no writ)). Under the “cause” analysis, the proper focus in interpreting “occurrence” under a liability